Finding a financial planner is the same thing like choosing a reliable family doctor. In this case, you are looking for someone who you can fully tryst to ensure your financial health. Finding one can be quite tricky, especially if you consider that there are dozens of financial credentials that you could run into. Even so, you should be able to take some steps to narrow down your search process and start making a short list of most prospective financial planners. The best step is to look for referrals from family and friends. If they are satisfied with a financial planner, it is quite likely that you feel the same way as well. In general, you should look for proper starting points and you should also check what kind of compensation models that you need to be aware of.
Credential is the first factor that you need to be aware. A good financial planner should adhere to regulatory standards. They should meet the education, ethics, experience and examination requirements in your local areas. They should have a broad knowledge of things related to your financial factors. They should be able to cover a number of details, such as taxes, insurance, planning, retirement, estate planning and investment. You should make sure that you have passed a rigorous examination based on various requirements. If your financial planner is not knowledgeable enough, then you may face significant risks. You need to be particularly careful and ask prospective financial planners, whether they have passed numerous examinations.
As you are nearing and entering retirement, you should already have good relationship with a financial planner. In fact, you should already have a financial plan working, based on your consultation with a planner, at least 10 years before the retirement. So, you shouldn’t delay in interviewing potential planners and it is important that you work with them as soon as possible. It means that you should work with a planner who is able to set up good relationship. In order to better work with a planner, you should be honest about the compensation details that you prefer. This will allow the planner to feel motivated working for you, because he knows how he will be compensated for his work. There are different methods of compensation, such as fee-only, fee-based and commission-based.
As an example, the planner could work with commission-based payment. It means that the financial planner will get compensation through commission on sales of various insurance products, such as bonds, stocks, insurance and mutual funds. The financial planner could also be fee-based. In this case, the compensation could be based on the percentage of money that is under the management of the planner, which can be represented by insurance, mutual funds, bonds and stocks. The financial planner could also work based on the fee-only compensation. It means that regardless of the results and the amount of work, he will obtain a fixed amount of fee regularly for specific period of time, such as hourly, weekly or monthly.